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ssue Of Licence: Under the Banking Regulation Act 1949, the RBI has been given powers to grant licenses to commence new banking operations. The RBI also grants licenses to open new branches for existing banks. Under the licensing policy, the RBI provides banking services in areas that do not have this facility. Prudential Norms: The RBI issues guidelines for credit control and management. The RBI is a member of the Banking Committee on Banking Supervision (BCBS). As such, they are responsible for implementation of international standards of capital adequacy norms and asset classification. Corporate Governance: The RBI has power to control the appointment of the chairman and directors of banks in India. The RBI has powers to appoint additional directors in banks as well. KYC Norms: To curb money laundering and prevent the use of the banking system for financial crimes, The RBI has “Know Your Customer“ guidelines. Every bank has to ensure KYC norms are applied before allowing someone to open an account. Transparency Norms: This means that every bank has to disclose their charges for providing services and customers have the right to know these charges. Risk Management: The RBI provides guidelines to banks for taking the steps that are necessary to mitigate risk. They do this through risk management in basel norms. Audit and Inspection: The procedure of audit and inspection is controlled by the RBI through off-site and on-site monitoring system. On-site inspection is done by the RBI on the basis of “CAMELS”. Capital adequacy; Asset quality; Management; Earning; Liquidity; System and control. Foreign Exchange Control: The RBI plays a crucial role in foreign exchange transactions. It does due diligence on every foreign transaction, including the inflow and outflow of foreign exchange. It takes steps to stop the fall in value of the Indian Rupee. The RBI also takes necessary steps to control the current account deficit. They also give support to promote export and the RBI provides a variety of options for NRIs. Development: Being the banker of the Government of India, the RBI is responsible for implementation of the government’s policies related to agriculture and rural development. The RBI also ensures the flow of credit to other priority sectors as well. Section 54 of the RBI gives stress on giving specialized support for rural development. Priority sector lending is also in key focus area of the RBI.
The banking industry is a systemically important industry for the Indian economy in general and financial sector in particular as it comprises nearly 90% of the total financial services sector of the country. The banking industry in India has undergone significant transformation since the initiation of the financial sector reforms that were part of the structural reforms of early 1990s. The banking sector has steadily evolved from a state-directed banking system into a fairly open competitive banking system. Banking in India has become service oriented, maturing from the days of ‘walking in business’ to the present situation of 24 hour banking solutions to attract customers. Disintermediation in the business has led banks to be extremely prudent in terms of their internal operations and has led to the adoption of newer products and delivery channels. Total banking assets in India touched US$ 1.8 trillion in FY13 and are anticipated to cross US$ 28.5 trillion in FY25. Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over FY06–13. Total deposits in FY13 were US$ 1,274.3 billion. Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent (in terms of INR) to reach US$ 2.4 trillion by 2017. In FY14, private sector lenders witnessed discernable growth in credit cards and personal loan businesses. ICICI Bank witnessed 141.6 per cent growth in personal loan disbursement in FY14, as per a report by Emkay Global Financial Services. Axis Bank's personal loan business also rose 49.8 per cent and its credit card business expanded by 31.1 per cent. With the potential to become the fifth largest banking industry in the world by 2020 and third largest by 2025 according to KPMG-CII report, India’s banking and financial sector is expanding rapidly. The Indian Banking industry is currently worth Rs. 81 trillion (US $ 1.31 trillion) and banks are now utilizing the latest technologies like internet and mobile devices to carry out transactions and communicate with the masses.
The Indian banking sector consists of 26 public sector banks, 20 private sector banks and 43 foreign banks along with 61 regional rural banks (RRBs) and more than 90,000 credit cooperatives.
Robust demand- Increase in working population and growing disposable incomes will raise demand for banking and related services Housing and personal finance are expected to remain key demand drivers Rural banking is expected to witness growth in the future
Innovation in services- Mobile, Internet banking and extension of facilities at ATM stations to improve operational efficiency Vast un-banked population highlights scope for innovation in delivery
Policy Support- Wide policy support in the form of private sector participation and liquidity infusion Healthy regulatory oversight and credible Monetary Policy by the Reserve Bank of India (RBI) have lent strength and stability to the country’s banking sector
Business Fundamentals- Rising fee incomes improving the revenue mix of banks •High net interest margins, along with low NPA levels, ensure healthy business fundamentals BASEI III- These measures aim to: improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source improve risk management and governance strengthen banks' transparency and disclosures. The reforms target: bank-level, or microprudential, regulation, which will help raise the resilience of individual banking institutions to periods of stress. macroprudential, system wide risks that can build up across the banking sector as well as the procyclical amplification of these risks over time.
Industry Analysis Banking
ISME PGDM 2015-2017
Structure of IBI
Top 10 Banks in India
Top 10 International Banks
Deposits and Priority Sector
Modern Banking Facilities
Challenges for IBI
Section 5(b) Banking Regulation Act 1949
“Accepting for purpose of lending, investing, deposits from public
Repayable on demand
Can be withdrawn cheque, draft, order”
World’s 1st Bank Taula de la Ciutat Barcelona, 1401
Oldest still existing Bank Monte dei Paschi di Siena
HQ Siena, Italy since 1472
Fabrizio Viola (CEO),
Alessandro Profumo (Chairman)
Originated in the last decade of the 18th century.
The General Bank Of India (Established 1786 but failed in 1791),
Hindustan Bank (Established in 1770 and Liquidated in 1829-32).
Largest bank Oldest existing State Bank of India
Initially Bank of Calcutta, June 1806.
1809 renamed the Bank of Bengal
Funded by Presidency Government
Other two the Bank of Bombay and the Bank of Madras
The three merged, 1921 the Imperial Bank of India,
India's Independence the State Bank of India, 1955
Formation of RBI in 1934 Nationalized January,1949 RBI Act,1934.
Except SBI every other bank was functioning
In 1969, 14 banks got nationalized.
6 more banks got nationalized in 1980.
Post liberalization era:
Initially 10% FDI allowed, at present 74% with some
Conversion from 4-6-4 model to 8 to 8 banking(present).
Adaptation of technology:
Electronic fund transfer
Automatic teller machines.
Core banking solutions.
PUBLIC SECTOR BANKS
• State Bank of India(SBI)
• Punjab National Bank
• Bank of Baroda
• Canara Bank
• Bank of India
PRIVATE SECTOR BANKS
• HDFC Bank
• ICICI Bank
• Axis Bank
• Federal Bank
• IDBI Bank
• Deutsche Bank, Germany
• Mitsubishi UFJ Bank, Japan
• Industrial & Commercial Bank of
• HSBC Holdings, UK
• Barclays PLC, UK
• BNP Paribas, France
• Japan Post Bank
• J. P. Morgan Chase & Co. USA
• Credit Agricole SA, France
• Royal Bank of Scotland Group(RBS)
Source- www.thetoplist.in Source- www.thetoptenz.net
TOP FIVE COMPETITIVE BANKS
• Bank of Baroda
• Canara Bank
• Bank of India
• HDFC Bank
• ICICI Bank
• Axis Bank
• Kotak Mahindra
• IndusInd Bank
• Citi Bank
• Standard Chartered
• DBS Bank
• Deutsche Bank
THE INDIAN BANKING INDUSTRY
SBI & Associates
Important industry- Indian
90%- total financial services
Service oriented- 24 Hrs.
10% Contribution to the GDP
By 2017- CAGR of 18.1%
Potential to become- 5th largest
in the world
Consists of :26 public sector, 20
private sector, 43 foreign, 57
regional rural & 92,114 credit
REASONS TO INVEST IN INDIA
India’s Banking Sector Is Constantly Growing
Amended Banking Laws Bill
Innovation In Services